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THE ringgit opened firmer against the greenback on Monday amid cautious sentiment over the trajectory of the US interest rates, said an analyst.
At 8am, the local note was slightly higher at 4.2050/4.2260 from Friday’s close of 4.2085/4.2155.
Bernama reported Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said expectations for a September rate cut are gaining momentum, with the US Federal Reserve anticipated to implement its first-interest rate reduction of the year.
“Given that consumer spending accounted for more than two-thirds of the US economy, the case for a September rate cut is gaining more steam,” he noted.
The University of Michigan Consumer Sentiment Index (CSI) fell to 58.6 points in August versus 61.7 points in the prior month. Other measures such as the Current Condition Index and the Expectation Index also declined during August.
“This suggests that consumer spending will likely weaken, while higher prices due to increased import tariffs may prevent them from splurging,” he said.
Against this backdrop, the ringgit may revisit the psychological level of RM4.20 today.
The impression that the Fed might be behind the curve in cutting interest rates lower seems to weaken the US dollar in the near term. The US Dollar Index (DXY) is hovering at 97.850 points.
At the opening today, the ringgit was higher against major currencies, but depreciated vis-a-vis the euro to 4.9224/4.9470 from Friday’s closing of 4.9185/4.9267.
It strengthened versus the Japanese yen to 2.8557/2.8701 from Friday’s close of 2.8653/2.8702 and gained against the British pound to 5.6999/5.7283 from 5.7050/5.7145.
The ringgit also traded firmer against regional peers.
It appreciated versus the Singapore dollar to 3.2777/3.2944 from 3.2820/3.2877 at Friday’s close and rose against the Thai baht to 12.9361/13.0091 from 12.9760/13.0032.
The local currency also improved against the Philippine peso to 7.36/7.41 from 7.37/7.39 previously and was almost flat against the Indonesian rupiah to 260.0/261.4 from 260.2/260.8.
Ringgit Poised for Further Gains as Analysts Forecast Renewed Momentum
Meanwhile, Bloomberg reported that the ringgit is poised for renewed momentum in the coming months, with analysts forecasting it could reach its strongest level in nearly a year. Expectations of further monetary easing by Bank Negara Malaysia (BNM) and the government’s continued focus on fiscal reforms are fuelling bullish sentiment.
Projections now place the currency at RM4.10 to RM4.15 against the US dollar by December. Oversea-Chinese Banking Corporation (OCBC) expects the ringgit to trade at 4.15 in the fourth quarter, while Malayan Banking Bhd anticipates 4.10. MUFG Bank, meanwhile, forecasts a 1.5% appreciation from current levels, supported by improved export competitiveness following a recent US tariff agreement.
The ringgit closed last week at 4.2120 to the dollar.
The currency, which rebounded from April lows, has recently stalled. However, upcoming inflation data could rekindle hopes for further rate cuts. BNM already cut its benchmark interest rate by 25 basis points in July, making it the final central bank in Southeast Asia to ease monetary policy in this cycle.
A record US$4.3 billion inflow into Malaysian bonds during the second quarter reflects growing investor confidence, with many betting that a looser monetary stance will boost returns.
While lower domestic interest rates typically weigh on a currency, expectations of a US Federal Reserve rate cut in September are seen mitigating the risk of capital outflows.
Analysts argue that Malaysia’s proactive policy mix and structural reform agenda could provide lasting support for the ringgit.
“The government’s commitment to follow through on fiscal consolidation is key,” said Christopher Wong, executive director and foreign-exchange strategist at OCBC, who expects a further rate cut before the end of the year.
Nevertheless, external risks persist. The US recently agreed to lower its reciprocal tariff on Malaysian exports to 19 per cent from a proposed 25 per cent, offering a reprieve for Malaysian firms. But analysts warn that trade volatility continues to pose threats.
“The prolonging of trade uncertainty, and the lingering possibility that tariffs land higher than current levels, presents a sizable risk for Malaysian businesses,” said Matthew Ryan, head of market strategy at Ebury Partners. “In this scenario, we would expect a moderate hit to Malaysia’s economy, and a more pronounced sell-off in the ringgit.”
At home, Prime Minister Datuk Seri Anwar Ibrahim has launched a five-year plan to boost long-term economic growth through to 2030, supported by a one-off RM2.8 billion stimulus package.
The measures include cash aid and fuel subsidies, alongside fiscal tightening efforts such as diesel subsidy cuts and the expansion of the sales and service tax.
Analysts say the balancing act between stimulating growth and maintaining fiscal discipline will be central to sustaining market confidence.
“Contained inflation could reinforce expectations for more policy easing and, in turn, strengthen the currency further,” said Lloyd Chan, currency strategist at MUFG.
“What stands out for the ringgit is the ongoing government-led structural reforms aimed at boosting productivity and enhancing fiscal discipline, which should provide enduring support for the currency.” - August 18, 2025